IBM has offered to buy Telelogic AB, a Swedish developer of software development tools, in a cash deal valued at 5.2bn Swedish krona, or about $745m, the companies announced today.

IBM plans to make Telelogic a part of its Rational tools division, the companies said. Telelogic makes products for managing complex software development projects, a category known as application lifecycle management. It also has tools for business process management and other areas.

Telelogic is advising its shareholders to accept the offer of 21 krona per share, which it said is a premium of 21 percent over Telelogic's closing share price on May 31, when speculation about a potential takeover of the company began.

Combining with IBM would allow Telelogic to expand worldwide and offer a more complete set of products for complex software development, Telelogic Chairman Bo Dimert said. The offer requires approval from competition authorities as well as from Telelogic's shareholders. IBM said it made the offer through a wholly owned subsidiary in Sweden.

Telelogic has about 8,000 customers, mostly in the aerospace, defence, telecommunications and electronics industries, according to an IBM statement posted on Telelogic's website.

Offering an example of how the two companies' products might be used together, IBM said an electronics vendor might use their software to design a smart home network for consumers that can control entertainment equipment, security systems and lighting.